Marshall Segan explains why angry customers are a golden business opportunity.
We have all encountered difficult customers. Those unreasonable, aggressive types we wish would vanish from our lives. You might fantasise about employing a “hit man” to rid you of that persistent re-offender or be tempted to give them a piece of your mind and tell them to, “go take a hike” but life unfortunately isn’t that simple. This article examines how the most unreasonable customers can be turned into a great asset.
Turn a negative into a positive
Reliable market research suggests unhappy customers can drive away dozens, if not hundreds of potential customers. In fact, in the 1980’s Kodak Australia spent many millions of dollars researching dissatisfied customers and came to the conclusion that unhappy customer drove away between 11 to 20 new customers, whereas happy customers only generated three to five new customers at best.
With this in mind it’s easy to calculate how much revenue an unhappy customer could cost your business both initially and in the longer term, because the aggrieved are prone to share their woes with others for many months, if not years, later.
In one of my earlier articles I wrote about a Sydney beauty business that missed out on at least $100,000 in potential profits each year because of a lousy receptionist. The solution for that business was to simply identify the problem, carry out a small costing and make a plan to correct the problem. In that case the options were to either “retrain” the receptionist or to replace her. The salon owner has since confirmed my diagnosis of the problem and made the necessary changes. This in turn has greatly added to the company’s cash flow.
Identify and rectify
Recognising the problem is 50 per cent of the solution – the other half is making a plan to solve it and ensure it doesn’t occur again. Many small to medium businesses don’t tackle problem customers head-on. Instead they hope the problem will go away – which is highly unlikely. The customer merely leaves the business and goes to another salon where they repeatedly tell staff (and customers) how dreadful the former business is and how they would never go back. As a business owner this costs you dearly and the losses add up over time, because that aggrieved customer is a walking bad advertisement for your business.
Play peacemaker
Angry customers offer a great opportunity. If handled thoughtfully and professionally they can often turn into your most loyal customers and strongest supporters. If you really listen to them you may very well uncover a valid issue or complaint and be able to rectify for the long-term benefit of the business. In some cases it may often be hard to see a valid point in the midst of their rant however in these cases patience goes a long way and very often the person could well be having a bad day and just need to be treated delicately. In these cases simply explaining you are sorry they feel that way, can go a long way to diffusing their mood. These clients can often be pacified with a simple gesture, offer or value-add on their next appointment. This can be enough to win them back forever.
Listening to complaints is a vital business tool, because there may very well be an issue within your business that has become buried under the day-to-day pressure of running a business.
Advertising gold
I know of a motor repair business in South Melbourne that on occasions has replaced a new motor a second time (at the expense of the business owner) rather than leaving a customer unhappy about the end result. This is a strong business with a fantastic repeat and referral rate. They hardly need to spend any money on marketing because work of mouth speaks volumes and brings them more than enough business. This proves if you handle a complaint cleverly and bring the unhappy customer around you are left with a life-long, referral source.
Spend money to make money
The famous US chain Nordstrom has a fantastic reputation for quality customer service and a returns policy that would make most Australian businesses buckle at the knees. In one famous case Nordstrom’s took back a pair of car tyres from an angry woman who swore she had purchased the tyres from one of their stores. Nordstrom has never sold car parts, however, the store manager refunded her (or gave her a credit note). This became so widely talked about in the US that the Wall Street Journal reported the story and Nordstrom have been reaping the rewards of free publicity ever since.
News spreads
While I was a guest speaker at an Australian beauty industry conference in 2009 I discovered the Nordstrom stores and their excellent reputation was known by more than a third of my Australian audience. So worldwide the chain has become known as a wonderfully, reliable retailer who offers a first-class shopping experience and customer-service with a refunds policy that is second to none.
Dealing with complaints
Here are some basic steps your business can take to reap the benefits from each and every customer complaint:
• Create a written complaints policy – discuss it with all staff, place it somewhere visible and adhere to it no matter how petty a complaint might seem.
• Create a customer complaint and feedback form – this creates a paper trail which you can use to investigate the problem, solve it, communicate the solution/offer to the customer and then “sign off” once the issue is resolved.
• Train staff for improved customer service and complaints handling – a clear business policy ensure consistency and avoids ad hoc handling of complaints which send a confusing message to staff and clients.
• Write to the complainant – before closing off on the issue make personal contact with the customer to ensure everything is amicable otherwise they might feel the issue hasn’t been resolved satisfactorily in their eyes and you will never know because they won’t darken your door again.
• Accept defeat when necessary – there will always be a small percentage of complaints you can never resolve satisfactorily in the eyes of the customer. Nevertheless, make sure the parting with your customer is courteous and final.
• Encourage staff to bring all problems to your attention – this enables you to correct the problem and improve your business. Unresolved problems will fester and cost your business money.
• Survey your customers – it pays to know exactly what your customers think of your business. On most occasions the customer will say good things about your business, but if they do not a bad response provides you with vital information which can help you make great, lasting improvements to your business.
• Remember, customer expectations have never been higher – you are up against dozens of neighbouring businesses and the internet gives the customer more power and knowledge than ever before. Word-of-mouth moves faster than ever before thanks to review and rating websites so ensure your business is talked about for all the right reasons. It’s also worth monitoring these sites and also reminding your loyal customers to feel free to tell their friends about you – if they feel strongly enough they very well might write a glowing online review about your business.
• Remember the Nordstrom story and fix the complaints in a fair way – keep in mind the problem as viewed by the customer and the old adage that the customer is always right. It is easier to appease one customer than try and win back or attract the dozens the person might in turn deter if let loose whiles still aggrieved.
Customer service improvement books have been around for many years and there is no shortage of suggestions to help you make your business shine. Business basics are still the same they were 60 years ago and if you stick to good basic principles and a customer focus you cannot help but stand out from the crowd in the long-term. All the best in building your business!
Marshall Segan operates Value Added Business Strategies, helping businesses of all sizes in many industries to achieve better results in their business operation without wasting large amounts of cash. Marshall has a broad business background in the medical, cosmetic services, building materials, property management, wine and spirits, manufacturing and importing industries and loves the challenge of helping business owners and managers get better returns from their operations. Call or email for his free brochure on simple ways to improve your business starting right away. Email: marshall@emerald.com.au, call 0418 377 763 or visit www.vabs.com.au for further information and advice.